The impact of the national minimum wage on labour productivity in Britain

We examine labour productivity in low-paying sectors of the British economy and find that productivity was positively affected by the national minimum wage’s (NMW) introduction. We calculate firm-specific labour productivity measures and then aggregate them to the level of low-paying sectors. Difference-in-differences analysis shows that, with notable exceptions, aggregate low-paying sector productivity has been significantly positively affected by the NMW. Effects’ magnitudes vary by sector and firm-size group over time.